Italian Yacht Berthing and Cruising Tax Causing Concern

While many megayacht owners worldwide were preparing for their holiday breaks, the Italian government was signing a new yacht tax into law. While the law is intended to help compensate for the country’s economic troubles, many marine-industry organizations fear it will impact megayacht charter and cruising tourism in the region.

The tax, which impacts any yacht cruising in Italian waters, yachts merely stopping in Italy, and ones that berth there, was approved on December 22. It is part of Prime Minister Mario Monti’s austerity budget, nicknamed “Save Italy.” Monti called for, and the Italian parliament approved, a number of cuts and taxes to help shore up the economy. Italy is the eurozone’s third-largest economy, and it has seen a lack of economic growth for nearly 10 years. In addition, its debt-to-gross-domestic-product ratio is so high that the country is at risk of defaulting on loans. “Without this package, we think that Italy would have collapsed, that Italy would go into a situation similar to that of Greece,” Monti told journalists before presenting the austerity package to the Italian parliament.

The yacht-berthing and yacht-cruising tax is set to go into effect on May 1, just as the summer charter and cruising season is beginning. The tax will be levied on a per-day basis based on LOA, starting at about 33 feet (10.01 meters). The larger the yacht, the larger the monetary amount. They’re hefty sums in total when you consider many chartering megayachts and private megayachts spend at least a week at a time in Italian waters. For megayachts, the rates are:

90 Euros (approximately $116) per day for vessels from 78’8” to 111’5” (24.01 to 34 meters)

207 Euros (approximately $268) per day for vessels from 111’6” to 144’3” (34.01 to 44 meters)

372 Euros (approximately $482) per day for vessels from 144’4” to 177 feet (44.01 to 54 meters)

521 Euros (approximately $675) per day for vessels from 177’2” to 209’10” (54.01 to 64 meters)

703 Euros (approximately $910) per day for vessels measuring more than 209’10” (64 meters).

There are some exceptions to these taxes, including an exemption for megayachts undergoing refit on land or in dry dock. Yachts that are five years old or older receive 15-percent and higher discounts. And, all sailing yachts receive a 50-percent discount.

Regardless, a number of marine organizations are lobbying the Italian government in an effort to amend the law. Federagenti, which represents more than 50 megayacht-oriented firms (mostly yacht agents and yacht brokers), is among them. Federagenti supports the Italian government’s desire to secure the economy, but it argues that the tax will have ramifications for marinas, fuel service firms, repair yards and service agents, provisioning companies, and tourism-related businesses. It is therefore joining the Italian marine-industry association UCINA and other industry groups in requesting that the tax be levied on ownership rather than days spent in Italian waters. Federagenti and the other groups are also requesting Italian-flagged yachts solely be subjected to the tax, and all charter yachts be exempt.

UPDATE, MARCH 1, 2012: Several reports out of Italy state an amendment to the law has been proposed. The law would subject just Italian-owned yachts and any yacht carrying Italian guests to the tax. The specifics:
• Italian owners will now be required to pay an annual fee, not daily, based on LOA. This applies regardless of whether the yacht is kept in Italy and regardless of flag.
• Any yacht, regardless of the flag, that hosts Italian guests will be beholden to the tax, unless proof is furnished that the owner (a non-Italian national) is onboard and that they are guests of that owner, not paying passengers.

Fulvio Luise, president of Federagenti, says, “The legislative process has not yet concluded, however with this important normative passed, we sincerely hope that it will be officially confirmed shortly. This will allow us to compete on an equal playing field with other countries in the Mediterranean for this important sector of the yachting market, and to continue to promote one of the most valued aspects of our country, nautical tourism. It will be necessary to wait for clarification on a few aspects of the law, in particular how this tax will be applied to leasing and the charter market and for foreign flagged vessels who have Italian citizens onboard.”

UPDATE, APRIL 5, 2012: The amendment officially passed, stipulating that the berthing tax will only be applied to Italian citizens who own a yacht, regardless of where she cruises and which flag she flies. Foreign citizens who own a vessel are exempt from this tax, regardless of their length of stay in Italian waters. Luise says that he and others in Federagenti have seen several charter brokers restore Italian itineraries to their offerings, since there is no longer a concern about non-Italian clients wishing to avoid the tax.

“Federagenti and the other groups are also requesting Italian-flagged yachts solely be subjected to the tax, and all charter yachts be exempt.”

This is a very strange argument indeed! Following this logic, motorway tolls in Italy would have to be paid by cars with an Italian number plate only. Taxes should always follow the originator principle (or polluter pays principle). A yacht cruising or at anchor will always have an environmental impact (pollution, destruction of the marine flora by the anchors) and it always occupies “public space”. Nobody is complaining about car parking fees so why complain about a very reasonably priced tax for superyachts? A charter client who is willing to pay € 400,000 for a one week charter of a 60m superyacht will certainly be able to pay an extra € 36,40 for taxes (less thank 1% of the charter rate!). Everyone, including the HNWIs, has to make an effort to safe our economic system. A system allowing the HNWIs to escape from paying taxes, leads to a collapse, as we can clearly see in Greece!